KuCoin, a cryptocurrency exchange, has assured its users that their assets are secure amidst criminal and civil allegations brought against them by the U.S. Southern District of New York (SDNY) prosecutors and the Commodity Futures Trading Commission (CFTC) on March 26. In response, KuCoin stated that it operates properly and values compliance with laws and regulations. It claimed to be investigating the allegations through its legal team. The exchange even appeared to disregard the allegations by sharing a tweet about cryptocurrency trading. Despite their reassurances, the value of KuCoin’s native token, KCS, has dropped by 12% in the last 24 hours.
Earlier on the same day, the SDNY announced criminal charges against KuCoin’s co-founders, Chun Gan and Ke Tang, both of whom are Chinese nationals. The charges include running an unlicensed money-transmitting business and failing to maintain an adequate anti-money laundering program. Prosecutors claim that despite having significant operations in the U.S., KuCoin did not register with the CFTC or the Financial Crimes Enforcement Network as a legitimate money transmitter. They also allege that the exchange onboarded U.S. users without proper licensing, constituting more than 18% of their user base in 2018.
Prosecutors further state that KuCoin facilitated over $5 billion in suspicious and criminal transactions since its establishment in 2017, and that its no-KYC (know-your-customer) policy played a crucial role in its growth and success. The CFTC has also filed a complaint, adding that KuCoin conducted commodity derivatives and leveraged transactions with U.S. individuals without implementing mandatory KYC procedures. It claims that the exchange did not employ IP-verification measures to block U.S. users during the period from July 2019 to June 2023.
The criminal and civil proceedings against KuCoin are ongoing, and the co-founders involved in the allegations, Chun Gan and Ke Tang, are currently at large. Neither prosecutors nor regulators have accused KuCoin of mishandling users’ assets.
